Q&A

How Vendor Compliance Improves Supply Chain Performance

Vendor compliance programs detect compliance problems and ultimately prevent them altogether, which has a critical impact on the supply chain. We connected with Greg Holder, CEO and founder of Compliance Networks, to learn more about how vendor compliance improves supply chain performance. Here’s what he had to say.

IRT: Vendor compliance has gotten a lot of attention in the press outside of the retail industry lately with major announcements from both Wal-Mart and Target. How does vendor compliance support improving supply chain performance?

Holder: In the 20 years, I have been associated with vendor compliance as both a practitioner and a service provider; I can’t recall ever seeing a single story related to vendor compliance initiatives for any retailer, let alone 2 or 3 within the last 6 months of 2016. Target and Walmart announced major changes from a compliance standpoint related to on-time and complete orders. In both cases, delivery windows are tightening, fill rate requirements are increasing, and penalties for failures are growing more costly. Around the same time, The Home Depot announced major changes to their inventory strategy. As retailers continue to struggle with changing consumer habits through the point of purchase, we will continue to see more and more announcements similar to these. People like to talk about the Amazon affect but I believe it has less to do with Amazon and more about the proliferation of smart phones and the shopping/browsing options available to every single consumer. We can now do research online and buy in the store, shop in the store while researching on the phone, and buy in the store and have delivered to the home. These are only a few examples of countless options available now that retailers must contend with. But the fact remains that the retailer must have the merchandise the consumer wants somewhere in their network and these requirements exist to ensure that happens. So in a nutshell, vendor compliance programs exist to help retailers execute the merchandising plan which is increasing in complexity. Retailers have to have access to the right product at the right time for the right price, now more than ever.